How to Make a Car Loan Prepayment Online

Car loan prepayment lets you repay part or all of your outstanding loan before the agreed tenure ends. Review applicable charges, payment options and potential interest savings before choosing a repayment method.

• Part payment reduces your outstanding principal while the loan continues, whereas foreclosure involves paying the amount required to close the loan.
• Prepayment charges depend on your loan product, repayment option and applicable loan terms, so confirm the actual charges before proceeding.
• Use the My Account portal or the Bajaj Finance App to review your loan details, check available payment options and complete the applicable process.
• Part payment may reduce your EMI, shorten your remaining tenure or lower future interest, depending on how the lender adjusts your repayment schedule.
• Check your outstanding balance, retain sufficient funds for essential expenses and upcoming EMIs, and save the payment confirmation for your records.

Request the final foreclosure amount before closing your loan, verify that the payment is recorded, and obtain the applicable closure documents after processing.

Car loan prepayment means paying an additional amount towards your outstanding loan before the scheduled repayment date or closing the loan before the tenure ends. The option you choose determines whether you continue repaying the remaining balance or close the account.

Prepayment generally includes two options:

• Part payment: You repay a portion of the outstanding principal and continue paying the remaining loan according to the applicable terms.
• Foreclosure: You repay the amount required to close the loan before the agreed tenure ends. The amount may include applicable charges and other outstanding dues.

An advance EMI is different from part payment. It covers an instalment in advance and does not necessarily reduce the principal in the same way. Check the payment option available for your loan before proceeding.

What is the difference between part payment and foreclosure?

Part payment reduces your outstanding principal, while foreclosure involves repaying the amount required to close your car loan. Your financial needs and the applicable charges can help you decide which option to consider.

Before choosing either option, compare the applicable charges with the interest you may save. Keep enough funds for essential expenses and upcoming financial commitments. If you are unsure which option suits your account, confirm the available choices with Bajaj Finance.

What are the car loan prepayment charges?

Car loan prepayment charges depend on the loan product, the type of prepayment and the terms applicable to your account. Part-prepayment charges may be calculated on the principal amount prepaid, while foreclosure charges may be calculated on the outstanding loan amount. Check your loan agreement and the applicable fees-and-charges information before making a payment. Do not assume that the charges for a new car loan also apply to a used car loan or another finance product.

For example, if an authorised charge rate of 3% applies to a part payment of Rs. 1,00,000, the calculation would be:

Part-prepayment charge = Amount prepaid × Applicable charge rate

Rs. 1,00,000 × 3% = Rs. 3,000.

This example shows the calculation only. The rate of 3% is an assumed figure, not a confirmed Bajaj Finance charge. Check the actual rate and amount applicable to your account before using this calculation to make a financial decision.

Some loans may qualify for charge exemptions under specified conditions. Confirm the applicable eligibility requirements and any restrictions before relying on an exemption.

Online car loan prepayment allows you to repay part of your outstanding principal or close your loan before the agreed tenure ends, subject to your loan terms. You can use the Bajaj Finance app or My Account portal to check your car loan details and review the payment options available for your account.

1. Sign in to the Bajaj Finance app or My Account portal using your registered mobile number and complete the required verification.
2. Open Account or Your relations, depending on the interface, and select your car loan account.
3. Locate the Make payments section and review the available payment options.
4. Select Part payment, Foreclosure or Advance EMI, depending on your repayment requirement and the options displayed.
5. Review the payment amount, applicable charges and terms before proceeding.
6. Follow the on-screen instructions to complete the transaction using an available payment method.
7. Save the payment confirmation and check your loan account to verify that the transaction has been recorded.

Before making a payment, ensure you select the correct option. Part payment reduces the principal, foreclosure involves repaying the amount required to close the loan, and advance EMI covers a scheduled instalment rather than automatically reducing the principal. If the required option is unavailable or the amount is unclear, contact Bajaj Finance through an authorised channel to confirm the applicable process.

How does car loan prepayment affect EMI and tenure?

Car loan prepayment reduces the outstanding principal when the lender applies the payment towards it. This may reduce future interest, but the effect on your EMI and remaining tenure depends on the applicable repayment terms.

Consider these possible effects before making a decision:

• Lower EMI: Your EMI may decrease if the lender revises the repayment schedule while keeping the remaining tenure unchanged.
• Shorter tenure: Your loan may end earlier if you continue paying the same EMI after the principal decreases.
• Lower interest cost: A lower principal may reduce future interest, depending on the interest calculation and remaining repayment period.

For example, if you make a part payment but continue paying the same EMI, the remaining tenure may decrease if the lender applies the payment under terms that allow this outcome. Confirm the revised schedule rather than assuming that your loan will close earlier.

Compare the potential interest savings with the applicable prepayment charges. Check your updated loan balance and repayment schedule after the payment has been processed.

What should you check before prepaying your car loan?

Review your outstanding balance, loan conditions, and applicable charges before making a car loan prepayment. These checks help you understand the cost and avoid paying an incorrect amount.

• Outstanding balance: Check the current principal and any other dues associated with your loan account.
• Applicable charges: Confirm the charges for part payment or foreclosure under your specific loan terms.
• Payment conditions: Check any minimum amount, timing restriction or other condition that applies to your account.
• Available funds: Keep sufficient money for essential expenses and scheduled EMIs after making the payment.
• Repayment changes: Confirm whether the payment may change your EMI, remaining tenure, or repayment schedule.
• Payment record: Retain the transaction confirmation and verify that the lender has recorded the payment against the correct loan account.

If you intend to close the loan, request the final foreclosure amount instead of paying only the principal balance. After the lender processes the closure, check your loan status and follow the applicable process for obtaining the closure documents.

Pre-closing your car loan, or fully repaying the outstanding loan amount before the end of the tenure, can provide financial relief and eliminate monthly EMI obligations. However, it is essential to consider several factors before proceeding with pre-closure.

Firstly, review your loan agreement for any pre-closure charges, as these can vary between lenders. Some institutions may impose a fee to compensate for the loss of future interest. Additionally, ensure that you have sufficient funds to cover the lump-sum payment without affecting your financial stability.

Secondly, consider the potential savings on interest. Calculating the total interest saved by pre-closing the loan can help determine if the benefits outweigh the pre-closure charges. Lastly, it's important to confirm any administrative requirements with your lender to ensure a smooth pre-closure process.

To effectively manage your finances and avoid additional costs, planning to pay in advance can be beneficial.

RBI Guidelines: No Prepayment Charges on Floating Rate Loans

• The Reserve Bank of India (RBI) has issued clear guidelines prohibiting lenders from charging prepayment or foreclosure charges on floating rate loans taken by individual borrowers. This measure aims to enhance borrower protection and promote fair lending practices.
• These guidelines apply primarily to floating rate term loans, including home loans and personal loans, where the interest rate changes in line with market movements or an external benchmark.
• By removing prepayment penalties, borrowers are allowed to repay their loans early, either partially or fully, without incurring additional costs. This gives individuals greater financial flexibility and control over their debt.
• The RBI’s move encourages competition among banks and non-banking financial companies (NBFCs), as borrowers can freely switch lenders to access better interest rates or service terms.
• The regulation also improves transparency in loan agreements, ensuring that borrowers are not discouraged from early repayment due to hidden or high foreclosure charges.
• These rules are applicable irrespective of the source of funds used for prepayment, whether from savings, asset sale, or refinancing through another lender.
• However, the waiver generally does not apply to fixed rate loans or loans taken by non-individual borrowers, such as companies or partnership firms.
• Overall, the guideline supports responsible borrowing, reduces long-term interest burden, and strengthens trust between lenders and retail borrowers.